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Interest Rate Cut?

By Markets, Mortgaging Costs, Time Sensitive, UpdatesNo Comments

Market Commentary provided by First National Financial LP

To cut, or not to cut? That is the big question for the Bank of Canada this week.

More and more market watchers are expecting another drop when the central bank sets its policy rate this week. Right now a little more than half believe we will see the overnight rate trimmed by a quarter point to 0.25%.
It sounds like good news for those with variable-rate or hybrid mortgages, but many observers, including those who expect to see a cut, are calling it a bad idea.

Key concerns include:

  • Adding more heat to the housing market, especially in Vancouver and Toronto.
  • Adding more imbalance to the, already out of whack, household debt-to-income ratio.

Further undermining the value of the loonie. That would immediately reduce consumer purchasing power while offering minimal benefits to the export sector which is battling slow growth in the global economy.

January 18, 2016
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CMHC-Rental Property Financing

By Home Purchase, UpdatesNo Comments

For those looking to purchase and finance rental properties, the minimum down payment has been at 20% now for some time, and so it remains. In years gone by, this down payment money had to be proven to have originated from the buyer’s own resources – it could not be gifted.

In the case of an owner occupied purchase, the down payment can be gifted from a directly related family member.

The big news from one of our key lenders at the start of July was an announcement that they would not allow gifted down payments (again from a related family member) to be applied to rental property purchases as well.

The credit score is a key focus with applicants scoring 740 and up being about to obtain 80% financing on investment properties with no mortgage insurance premium, no fees, no higher than market rates.

For those with a credit score below 740, the down payment must be increased to 25% in order to avoid the mortgage insurance premium, although with this premium 80% financing is possible.

This Rental Property Financing change is a program designed to enable the smaller investor to pool resources with other family members and get into the Real Estate market. It opens the door of opportunity for many who have otherwise been locked out of buying additional properties.

September 9, 2015
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Best Rate Not Always The Best Mortgage

By Markets, Mortgaging Costs, Time Sensitive, UpdatesNo Comments

Almost always, when rates are offered at substantial discount to the norm, you should be aware that restrictions and special conditions may apply. That’s where the value of a Mortgage Broker works in your favour.

Not only will a good Mortgage Broker find you the best interest rates in the market, but with knowledge and expertise about available products in the market, he can save you cost over the long term. Mortgage borrowers faced with high penalties, mortgage portability issues, limited pre-payment options, conversion restrictions and lender fees could end up paying a lot more with a “low rate discounted mortgage” than with a flexible mortgage product with a slightly higher rate.

Our advice? Think long term when you make that mortgage decision. Know what you are getting into before you sign.

June 4, 2014
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Collateral Versus Standard Charge Mortgages

By Home Purchase, Mortgaging Costs, Refinancing, TipsNo Comments

With some lenders moving towards collateral charge mortgages versus standard charge mortgages, it’s important to understand the differences between a collateral and a standard charge mortgage.
The primary difference is that a collateral charge mortgage registers the mortgage for more money than you require at closing. For instance, up to 125% of the value of the home at closing with TD Canada Trust or 100% through many credit unions, instead of the amount you need to close your transaction (as is the case with a standard charge mortgage).

The Downside

The major downside to a collateral mortgage becomes evident at your mortgage renewal date. For borrowers who want to keep their options open at maturity and have negotiating power with their lender, this isn’t the best product feature because collateral charge mortgages are difficult to transfer from one lender to another.
In other words, if you want to change lenders in order to seek a better product or rate in the future, you have to start from the beginning and pay new legal fees, which range from $850 to $1,000. With a standard charge mortgage, in most cases, the new lender will cover the charges under a “straight switch” in order to earn your business.
In addition, with a collateral charge, it could be difficult to obtain a second mortgage or a home equity line of credit (HELOC) unless your home significantly appreciates in value.
Lenders offering collateral charge mortgages promote the benefit that it makes it easier and more cost effective to tap into your equity for such things as debt consolidation, renovations or property investment. There’s no need to visit a lawyer and pay legal fees – the money is available as your mortgage is paid down. Yet, if you read the fine print, you may still have to re-qualify at renewal.

A standard charge mortgage gives you the ability to move to another lender at renewal should you want to without incurring legal fees, and many borrowers find it more beneficial to keep their options open. If you need to borrow more with a standard charge mortgage, you have the option of a second mortgage or a HELOC, which also enables you to take money out as your mortgage is paid down.
Navigating through the mortgage process alone can be tricky. Working with a mortgage professional who has access to multiple lenders will help ensure you receive the product and rate catered to your specific needs.

January 22, 2014
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Heat Recovery Ventilator-Lungs For Your Home

By Time SensitiveNo Comments

Sustainable Housing: Lungs for Your Home

Stale air, lingering odours and high humidity can happen in the best of homes and, sometimes, simply opening a window can bring relief. When it’s mild outside and there’s a breeze, opening a window can be beneficial. But in Canada’s hot and cold climate, this is not always practical or possible.

Leaving a window open in mid-winter will add to your space heating costs, cause uncomfortable drafts and the window may freeze open. You also can’t filter the dust out of the air nor can you recover any of the heat that flows out an open window. Sometimes leaving a window open is a security or noise concern. Finally, you can’t control how much air enters through an open window or where it goes once it’s in your house.

Heat Recovery Ventilator

Fortunately, there is another way of bringing fresh air into your home that is energy efficient, secure and highly effective – a heat recovery ventilator (HRV). HRVs are suitcase-sized appliances that typically have one fan to bring in outdoor air and another fan to push out the stale air. Heat is transferred from the outgoing air to the incoming air by passing the two air streams through a heat-exchange core, helping to reduce heating costs. As the two air streams are kept separated, only the heat is transferred to the incoming air. In a sense, an HRV can act as the lungs for your home.

In houses with baseboard or radiant heating, the fresh air from the HRV is delivered directly to the bedrooms and the main living areas through a dedicated duct system. At the same time, the HRV draws stale air from the kitchen and bathrooms and sends it outside.

In houses with furnaces, it’s not uncommon to find HRVs connected to the furnace ductwork system. The furnace then operates continuously to circulate the fresh air around the house, while bathroom fans and kitchen range hoods provide back-up ventilation as needed. HRVs have multi-speed settings to deal with varying ventilation needs. Automatic controls are available as well to modulate the operation of the HRV as needed.

HRVs are built into energy efficient new houses to reduce air leaks, and heating and cooling costs, and keep your home more comfortable. Cutting down on uncontrolled air leakage also helps protect your roof, walls and basement from moisture damage. The better sealed a house is, however, the more it needs controlled, energy efficient, mechanical ventilation to provide the indoor-outdoor air exchange required to maintain healthy indoor air quality. By eliminating random air leaks in existing houses and adding heat recovery ventilation, you reduce your heating bills while maintaining as good, or better, indoor air quality.

Installation

Although you can buy an HRV at some home improvement stores, it may be preferable to have it designed and installed by a qualified contractor certified by the Heating, Refrigeration, Air Conditioning Institute of Canada or other training organizations in accordance with current building codes and standards. It’s very important to measure and balance the supply and exhaust airflows to ensure the HRV does not potentially create dangerous house depressurization or pressurization problems. This should be carried out when the HRV is first installed and should be checked regularly afterwards by a qualified contractor in accordance with the manufacturer’s instructions. Look for units with lower energy usage and high energy efficiency in the heating season, preferably choosing from those with an ENERGY STAR® rating.

To learn more about other sustainable technologies and practices that can improve the performance of your home as well as information on owning or buying a home, call Canada Mortgage and Housing Corporation (CMHC) at 1-800-668-2642 or visit www.cmhc.ca.

January 22, 2014
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Is Refinancing For You?

By Opportunities, RefinancingNo Comments

There are numerous reasons why homeowners choose to refinance their mortgages – everything from debt consolidation to freeing up money for their child’s education to using their home equity to buy another property. But the most popular reason for refinancing at this time of year is for holiday gift buying and entertainment.

Planning ahead really can save you money down the road. And with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest unsecured credit such as credit cards and lines of credit.

You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card and/or line of credit balances. This will enable you to put more money in your bank account each month.

And since interest rates continue to hover near historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. We can sit down with you and work through all of the equations to ensure this is the right move for you.

With access to more money, you’ll be better able to manage both your holiday spending and existing debt.

Paying your mortgage down faster

By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.

By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.

November 28, 2013
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Connecting Business And The Arts

By Community, Markets, Time SensitiveNo Comments

Rates first…Prime interest rate remains stable and recent Fixed Rate decreases have seen our lowest 5 Year Fixed Rate down to 3.45%. Some “Experts” are now predicting that we could even see further declines in interest rates.

Now with interest rates out of the way, HAVE YOU THOUGHT ABOUT…your involvement in your local cultural activities?

What IS the connection with business and the arts? Our firm has recently become involved with the Kamloops Symphony Orchestra with one of our staff as a member of the Board. We’re slowly acquiring a greater appreciation for the role of Orchestral and Classical Arts in our community. Why? Perhaps the quotes of some interesting people can explain..

  • “It is in Apple’s DNA that technology alone is not enough—it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing.”
    –Steve Jobs, in introducing the iPad 2 in 2011
  • “In my own philanthropy and business endeavors, I have seen the critical role that the arts play in stimulating creativity and in developing vital communities….the arts have a crucial impact on our economy and are an important catalyst for learning, discovery, and achievement in our country.”
    –Paul G. Allen, Co-Founder, Microsoft
  • “We need people who think with the creative side of their brains—people who have played in a band, who have painted…it enhances symbiotic thinking capabilities, not always thinking in the same paradigm, learning how to kick-start a new idea, or how to get a job done better, less expensively.”
    –Annette Byrd, GlaxoSmithKline
  • “Arts education aids students in skills needed in the workplace: flexibility, the ability to solve problems and communicate, the ability to learn new skills, to be creative and innovative, and to strive for excellence.”
    –Joseph M. Calahan, Director of Corporate Communications, Xerox Corporation

Our Message? Support Your Local Symphony Orchestra

November 13, 2013
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The Importance of Portability

By Refinancing, Tips

Selling your current home and moving into a new one can be stressful enough, let alone worrying about your current mortgage and whether you’re able to carry it over to your new home.

Porting enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. And, better yet, the ability to port also saves you money by avoiding early discharge penalties.

It’s important to note, however, that not all mortgages are portable. When it comes to fixed-rate mortgage products, you usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

With variable-rate mortgages, on the other hand, porting is usually not available. As such, upon breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage.

Porting conditions

While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, some conditions that may apply include:

  • Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
  • Some lenders don’t allow a changed term or force you into a longer term as part of agreeing to port your mortgage.
  • Some lenders will, in fact, reimburse your entire penalty whether you’re a fixed or variable borrower if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand new term of your choice and start fresh.
  • There are instances where it’s better to pay a penalty at the time of selling and get into a new term at a brand new rate that could save back your penalty over the course of the new term.
October 24, 2013
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Getting Those Energy Bills Air Tight

By Home Maintenance, Home Renovating, TipsNo Comments

In Canada, space heating can account for up to 60% of most homeowners’ energy bills. This is especially true with older homes, which can often be drafty, lightly insulated and may still have older, less energy-efficient windows, doors and heating systems. This can add up to substantially higher home heating costs.

One of the best ways to cut down on your bills and keep your house warm in the winter and cool in the summer is by making sure your home is well sealed. Canada Mortgage and Housing Corporation (CMHC) offers the following tips on how to improve the airtightness of your home, in order to help you save money, reduce your environmental footprint and make your house more comfortable to live in.

Air sealing not only cuts heat losses and gains, but it also improves comfort by reducing drafts, helps improve the performance of the insulation in your walls and attic by stopping cold winter wind from washing through it, and it can help prevent moisture build-up in your walls and attic.

Finding air leaks can often be a challenge. Sometimes they’re detectable by feeling for cold drafts in suspect locations. Other times, you may be able to see daylight shining in through unwanted openings. Blackened insulation is often another sign. For a more thorough assessment, consider hiring a qualified residential energy service provider to perform a “blower door” test of your house. During this test, your house is forced to leak, making it easier to find air leakage locations with smoke emitting devices or a special thermographic scanner.

A blower door test can also tell you the size of the hole all the leakage areas would add up to if they were all centralized in one location. This is helpful when you want to know how leaky your house is relative to other houses. If a blower door test is done before and after air sealing, you can also find out how much you’ve reduced the air leakage of your home.

Some of the more common air-leakage points can include: ceiling pot light fixtures installed through ceilings into attic spaces, electrical boxes in ceilings and exterior walls; inside to outside wiring, plumbing and duct penetrations; bathroom exhaust fans installed in attic ceilings; older windows and doors; the joint between windows and the surrounding walls; and floor-wall joints.

Once you have located the leaks, you can use a variety of different approaches to seal them. For instance, leaky windows and doors can be sealed with gaskets or new weather stripping. Gaps around wiring, pipes and ducts can be sealed with caulking or spray foam. Electrical boxes can be sealed with special gaskets that fit behind the box plate covers. Joints between walls and floors and around the top of your foundation may be sealed with caulking or spray foam depending on the size of the gap. To find out the right options for your home, be sure to consult a contractor with expertise in air leakage control.

If you’re replacing your exterior siding, it’s a good time to add an exterior air barrier (and more insulation) that wraps your house in a draft-proof cover from the basement to the attic.

While air sealing is always a good idea, you may have to add mechanical ventilation in the form of a bathroom fan, range hood or, better yet, a heat recovery ventilation system, to help maintain healthy indoor conditions.

Air sealing can also adversely affect the ability of some fuel-fired furnaces, boilers and hot water tanks to safely vent combustion products, so an additional source of outdoor air may be needed. Consult a qualified mechanical contractor for guidance on ventilation system options and combustion air needs for your home before you start.

October 24, 2013
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Home Renovation Financing Options

By Time SensitiveNo Comments

There are many different reasons to renovate a home: to save energy (and save on utility bills), to make room for a growing family, to improve safety or increase the resale value of your home, or simply to bring a fresh new look to your home. There are also a number of different home renovation financing options

Explore your options…

Your own resources: For smaller renovation projects, you may consider self-funding material costs, especially if you plan to do the work yourself.

Credit card: Likewise, you can use your credit card to pay for materials for smaller renovations. But be careful not to carry the balance for too long. Credit card interest rates can exceed 18%.

Personal loan: With a personal loan, you pay regular payments of principal and interest for a set period, typically one to five years. You also have the option of a fixed or variable interest rate for the term of the loan. The interest rate on a personal loan is typically less than that of a credit card. Unlike a line of credit, however, once you pay off your loan, you’ll have to reapply to borrow any new funds needed.

Personal line of credit: This is another popular choice for financing renovations. It’s ideal for ongoing or long-term renovations since it lets you access your funds at any time and provides a monthly statement to help track expenses. A line of credit offers lower interest rates than credit cards, and charges interest only on funds used each month. And, as you pay off your balance, you can access remaining funds, up to the line of credit’s limit, without reapplying.

Secured lines of credit and home equity loans: These options offer all the advantages of regular lines of credit or loans, but are secured by your home’s equity. They can be very economical, since they offer preferred interest rates, but keep in mind that initial set-up costs including legal and appraisal fees usually apply. Lines of credit are typically limited to 65%, while home equity loans are capped at 80% of your home’s value.

Mortgage refinancing: When funding major renovations, refinancing your mortgage lets you spread repayment over a longer period at mortgage interest rates, which are usually much lower than credit card or personal loan rates. This type of financing can allow you to borrow up to 80% of your home’s appraised value (less any outstanding mortgage balance). Initial set-up costs including legal and appraisal fees may apply.

Financing improvements upon purchase: If you’re planning major improvements for a home you’re about to purchase, it may be advantageous to finance the renovations at the time of purchase by adding their estimated costs to your mortgage. Canada Mortgage and Housing Corporation (CMHC) Mortgage Loan Insurance can help you obtain financing for both the purchase of your home and the renovations – up to 95% of the value after renovations – with a minimum down payment of 5%.

Grants/rebates for energy-saving renovations

Across Canada, renovation grants and rebates are available from the federal and provincial governments and local utilities, especially for energy-saving renovations. If you qualify, they may help pay for some of your project’s costs.

DID YOU KNOW…
There are many ways to significantly reduce or even eliminate paying credit card fees. Conscientious cardholders can avoid paying most of these fees altogether when they choose the right cards and use them wisely. As always, if you have questions about paying your mortgage off quicker, or other mortgage-related questions, We’re here to help!

July 24, 2013
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Shameless Self Promotion

By Home Purchase, Markets, Opportunities, TipsNo Comments

When choosing a mortgage, you want advice that you can count on. As a member of one of Canada’s longest established national broker networks, Our Brokers are dedicated to providing you with all the information you need to make a well-informed decision on your mortgage financing needs. We’re updated with knowledge of the current market trends, rates, and regulations regularly, allowing us to provide you with sound guidance.

More lenders are now offering a wider range of mortgages to choose from. Consumers have begun to shop around for their mortgage rather than simply taking what their financial institution offers. Lenders have started advertising discounted rates, making it obvious that there’s a good reason to shop around. But the biggest reason for the increasing reliance on a mortgage broker is that we can offer you several important advantages:

  • Independent, unbiased advice. As mortgage brokers, we provide mortgages from various lenders, so we’re not tied to one lender or one type of mortgage.
  • More mortgage choices. Mortgage brokers have direct electronic access to virtually every major lender in Canada, so we can show you a wide range of rates and features.
  • Best-available rates. We study the rates daily and always know where to find the most competitive ones. Plus we know how to negotiate with lenders to ensure you’re getting the best available deal.
  • Fast, convenient local service. Mortgage brokers are highly motivated to keep your mortgage moving forward quickly because we only get paid – by the lender – when your mortgage is complete.
  • Specialized knowledge. As mortgage professionals, we have a thorough understanding of all available products, features and rates. And we can explain everything to you so you know exactly what you’re getting into.
  • Secure, established lenders. Mortgage brokers deal with the same reputable, established Canadian financial institutions you’re used to. Plus, we have access to some innovative broker-only lenders who offer even more attractive rates and features.

The Mortgage Centre became one of Canada’s first national mortgage broker organizations in 1989. I’m fully qualified to provide you with all of these benefits. Plus, we’re local business persons with roots in the community and a deep understanding of your local market.

Using a Mortgage Broker from Mortgage West-The Mortgage Centre is by far your best mortgage option.

May 2, 2013
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Good News

By Markets, Time Sensitive, UpdatesNo Comments

The latest policy announcement and monetary statement from the Bank of Canada amount to good news for mortgage borrowers. The Bank is holding its benchmark rate at 1% and has lowered expectations for economic growth.
The Bank is maintaining its stance that the next rate move will be up, but it is also indicating that isn’t likely to happen anytime soon. Reduced growth forecasts, increased slack in the economy and low inflation pressure have some market watchers putting off any rate hike as far as 2015.
There are also external factors that support the “lower for longer” view, in particular the lack of speed in the U.S. recovery and the new, extraordinary efforts by Japan to stimulate its economy. The Japanese moves play into international currency and bond markets where Canada is one of a shrinking number of safe havens. The BoC may be forced to use low interest rates to prevent the Loonie from becoming too strong.

Commentary provided by First National Financial LP

April 25, 2013
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Broker or Bank Mortgage Specialist?

By Home Purchase, Refinancing, TipsNo Comments

It seems that a number of Bank Mortgage Representatives (Specialists) have been holding themselves out to be “Mortgage Brokers”. This week, one Bank Representative in Toronto sheepishly and without comment, withdrew the “Mortgage Broker” title from his website after being challenged by an industry publication.

Another trend in the unregulated world of the Internet is for some lenders to include the term “Mortgage Broker” in their key words so that when searching for a Mortgage Broker on Google, their link will show. In a way, that can be flattering to the Broker industry.

Discounting the fact that in most Provinces it is misleading and unlawful to call yourself a Broker when you are not, is there a difference between Bank Mortgage Rep’s and Mortgage Brokers? You bet there is!

First and foremost, a Bank representative is authorized to present only their employer’s products. A “Broker” on the other hand is not allied with any Lender, but is free to shop the entire market for the best deal for his client. It follows then, that the Broker is not conflicted between the interests of the lender and the borrower. The Bank Rep, on the other hand may be incented financially to offer higher rates or to recommend other of his employer’s products to maximize Bank profits. Is that a conflict? You decide.

In our admittedly biased view of things, a Mortgage Broker is better equipped to serve your needs with wider range of products and solutions not available from a Bank Representative.

October 18, 2011
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Reverse Mortgages

By Home Renovating, Mortgaging Costs, Opportunities, Refinancing, Time SensitiveNo Comments

From time to time I am asked about Reverse Mortgages and how they work. Our main partner in this product is ‘CHIP’ or Canadian Home Income Plan.

In order to qualify for a CHIP Reverse Mortgage, both you and your spouse must be at least age 60. The typical borrower who benefits from this program either has his home paid for or has substantial equity. With CHIP, the maximum available mortgage is limited to 40% of your home’s value and the older you are, the greater the percentage you can borrow.

With a Reverse Mortgage, you make NO PAYMENTS! That’s right, the interest portion is added to your balance and you and your spouse can live in the home until you decide to sell or the surviving spouse passes away. This type of mortgage is generally suited to the borrower who needs cash but either cannot, or would prefer not to make payments in their later years.

Interest Rates are quite affordable with CHIP and are generally speaking, very close to Bank Posted Rates. For updated rates and terms and general information, click here.

A Reverse Mortgage is not for everybody, but your Mortgage Professional at The Mortgage Centre will help if this plan is right for you. We’ll give you the valuable advice you need to make a decision about this innovative product and walk you through the process of applying for and completing your CHIP Reverse Mortgage.

May 24, 2011
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Stability In The Canadian Mortgage Market

By Markets, Time Sensitive, UpdatesNo Comments

The Canadian Association of Accredited Mortgage Professionals (CAAMP) just released their Spring Survey Report on the Canadian Mortgage Market (Published with permission). The report was penned by CAAMP’s Chief Economist, Will Dunning. Here are some of the conclusions of that report:

  • There is currently $855 billion in mortgages on principal residences and $215 billion in Home Equity Lines of Credit (HELOC)
  • Individuals with HELOCs only have an average 65 per cent equity in their homes
  • HELOC prevalence is highest among middle age homeowners
  • Equity takeouts amount to $26 billion annually, with most funds used for renovations ($9.4 billion), followed by investments ($5.0 billion)
  • The average down payment for a home purchased in the last 12 months was 30%, up from 26% for homes purchased two years ago
  • Among all borrowers, 63 per cent have fixed rate mortgages, 30 per cent have variable rate mortgages and 6 per cent have a combination of both
  • Less than a quarter (22 per cent) of all borrowers have amortization periods longer than 25 years
  • 34 per cent of those who most recently renewed or renegotiated their mortgages did so before their term expired.
  • The average time to pay off a mortgage is 7.4 years less than the original amortization
  • 200,000 homeowners paid off their mortgages in the last 12 months
  • The average mortgage interest rate discount is 1.44 per cent for those who chose a five year fixed rate mortgage in the last twelve months with the average mortgage rate being 4.04%
  • Of those who renewed their mortgages in the last twelve months, 65 per cent are paying lower rates than previously
  • 66 per cent of all mortgage borrowers can tolerate a monthly mortgage increase of $300 or more
  • Among borrowers who took out a new mortgage in the last 12 months, 27% obtained it from a mortgage broker.
  • Overall mortgage broker share stands at 23%
  • Canadian appetite for home buying has returned to pre-recession levels, following a slide over the past three surveys.
  • Almost 60 per cent respondents thought that now was a good time to buy
  • Optimism is returning to the market with almost half (46 per cent) of those questioned saying that they expect prices to rise
May 11, 2011
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Annual State Of The Residential Mortgage Market In Canada

By Time Sensitive, UpdatesNo Comments

The Canadian Association of Accredited Mortgage Professionals just released their report on the State of The Residential Mortgage Market in Canada. Some of the more significant indicators and trends are very interesting.

  • 35% of all mortgage holders have either increased their payments or made a lump sum payment on their mortgage in the last 12 months
  • Vast majority of Canadians have ability to afford higher mortgage payments. 84% said they could handle monthly increases of $300 or more in their monthly payments
  • 90% of Canadian homeowners have at least 10% equity in their homes, 81% have over 20% equity
  • 70% of Canadians are satisfied with their mortgage terms
  • Despite low Bank of Canada interest rates reflected in low variable rate mortgages, a majority (66%) of Canadians still have a five year fixed mortgage, 29% have variable mortgages and 4% a combination
  • Overall, 22% of mortgages have an amortization of greater than 25 years compared to 18% last year
  • Overall home equity is 72%. For homeowners with mortgages, equity level averages 50%
  • Mortgage rates continue to drop. Average mortgage rate is 4.22% versus 4.55% last year. For those who took out a mortgage in the last year, the average rate was 3.75%, 72% of those renewing saw a decrease in their mortgage rate
  • Overall, mortgage brokers account for 25% of all mortgages, for new mortgages in the past year this number rises to 40%
  • As of August 2010, there was over $1 trillion in outstanding residential mortgage credit in Canada
  • Mortgage arrears rate remains stable at 0.42%, lower than for most of the 1990s
November 8, 2010
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Shopping For A Mortgage-A Matter of Trust

By TipsNo Comments

Why use a Mortgage Broker? This is a question that many people ask themselves when they are looking for a mortgage to make a purchase or when they are renewing their existing mortgage. Most Canadians rely on the Banks and Credit Unions to provide them with the “best mortgage”. It is all about trust. We Canadians trust our Banks and Credit Unions to give us the “best mortgage”.

But is this trust deserved? Certainly, every banker I have met is trustworthy. However, they do work for the Bank, not for you. And that is not a good thing for you when you are shopping for a mortgage. The Bank or Credit Union officers can only offer their own mortgage products, and at their own rates. If you are a great negotiator, you “might” get their best mortgage. If not, you could be leaving hard earned dollars on the table. And, their best mortgage might not be as good as the best mortgage offered by another lender.

A mortgage broker does not work for any one Bank or Credit Union or Trust Company. A mortgage broker has access to virtually ALL the best mortgages being offered by ALL the best Canadian mortgage lenders- including the Banks and Credit Unions. So you are guaranteed that you will get the best mortgage when you deal with a mortgage broker.

It is all about trust. Who are you going to trust? Your banker, that works for the Bank’s best interest? Or your mortgage broker, who works for your best interest?

November 21, 2009
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The Cost of Paying Posted Rates

By Mortgaging Costs, Time Sensitive, TipsNo Comments

Why is there such a big difference between bank posted rates and The Mortgage Centres’ lowest rates?

The simple answer is that many lenders have posted rates which they charge to clients who often do not realize that lower rates are available. They offer the posted rate to their client and if the client accepts that rate they have a very profitable mortgage.

Let’s look at an example of the difference to a mortgage customer between posted rate and the current best discounted rate being offered for the same term.

For our example let’s assume a mortgage of $250,000 for a 5 year term amortized over 25 years. A quick scan of today’s (October 9th, 2008) rates shows a typical posted rate for such a mortgage at 5.5%. Based on that rate a mortgage customer would have payments of $1,524.52 for 5 years. At the end of 5 years the remaining balance would be $222,935.77.

For the same mortgage at the current lowest rate of 3.84% the payments would be $1,293.46. This is a savings of $231.06 per month. In 5 years the total savings is $13,863.60. At the end of 5 years the remaining balance on this mortgage would be $217,023.99, which represents a further savings of $5,911.78.

The total savings available at discounted rates is $19,775.38. The financial institutions have a very
important reason to offer posted rates.

Your mortgage broker will save you many thousands of dollars by offering you only the very lowest rates available for your mortgage. Remember your mortgage specialist works for YOU not for the banks.

For more information about this or for any other mortgage topic please call at 374-2222 or e-mail:
benard.v@mortgagecentre.com

October 9, 2009
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Mortgage Q & A’s for 2009

By Home Purchase, Opportunities, Time Sensitive, UpdatesNo Comments

How Much do I have to put down on my house purchase?
While there are still a few programs available to purchase a home with little or no down payment, you should expect to provide a down payment of at least 5% of the purchase price of the home. Most lenders today also expect you to have 1.5% of the purchase price available for closing costs (legal fees, appraisals, taxes, etc). There are exceptions to these guidelines, so check with a mortgage professional.

Over how long a period can I amortize my new mortgage?
Formerly a mortgage borrower was able to obtain mortgage financing and amortize the mortgage for up to 40 years. Recent rule changes have by and large eliminated the 40 year pay off period and the maximum is now 35 years.

How can I use the Home Buyers Plan (RRSP Withdrawal) to assist with my home purchase?
The Home Buyers Plan is available to any qualifying first time home buyer. You are not considered a
first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. The recent Federal Budget increased the amount that you can “borrow” from your RRSP to $25,000 per person. There are a number of qualifying criteria which can be viewed on the Canadian Government website: http://www.cra-arc.gc.ca. Search for “Home Buyers Plan”.
First-Time Home Buyers’ (FTHB) Tax Credit

Home Buyer’s Tax Credit
For 2009 and subsequent years, the recent Federal budget introduced a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750.The tax credit, whether claimed by a single or a couple cannot exceed $750.00. Again details of this program are available at http://www.cra-arc.gc.ca. Search for “HBTC”

June 2, 2009
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Credit Scoring

By Home Purchase, Home Renovating, Refinancing, TipsNo Comments

Credit scoring is a numerical rating system that tells lenders what kind of credit risk you are. This rating system is becoming more and more important and most lenders are now setting the interest rate you pay based on your credit score.

It follows then, HIGHER CREDIT SCORE, LESSER INTEREST.

For example, one borrower scoring in the low 600’s pays an interest rate of 6.5% on his 5 YEAR mortgage. His friend scoring in the low 700’s gets the same mortgage at 5.5%. The higher credit score will pay over $10,500 less interest on his $200,000 mortgage over just the next 5 years AND pay off the mortgage over 4 years sooner.

Thinking of applying for a mortgage? Before you do, ask your mortgage broker to coach you on how to maximize your credit score. For more background on Credit Scoring check out these links:

Trans Union – Credit Scoring
Equifax – Credit Scoring

May 26, 2009
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The Magic of Refinancing

By RefinancingNo Comments

If you’re thinking of taking equity out of your home to consolidate debts, invest, or to do renovations, your home can be used a tool to enhance your life. Let’s use the example of a debt consolidation:

Jim owns his home, but is having trouble making his mortgage payments. Work is slow and he hasn’t been getting the overtime he’s used to. The overtime was going to help pay off his Credit Card, his home theatre system, and the renovation loan he took out early last year. Jim is finding it a challenge to make ends meet. Is there something he can do to save his credit and free up some extra money?

Absolutely, let’s do the numbers. Jim’s monthly costs are:

  • His mortgage of $250,000.00 with a monthly payment of $1600/month.
  • His Credit Card with a balance of $8000 and minimum payment of $240.00/month
  • Also, he has the renovation loan at $308.00/month and…
  • The home theatre loan at an additional $300.00/month

Overall, with monthly payments adding up to $2448/month and a total debt load of $278,800.00, Jim is feeling the pressure. But, if he refinanced and increased his mortgage to pay out all his other debt, his monthly payment would be reduced to $1784.00/month. That’s a monthly savings of $665.00! Now Jim is a smart fellow and decides he will put that $665.00 savings back into the mortgage. So, nor only does he have just one payment on his low rate mortgage, he will now pay the entire balance in 14 years and not the 25 years he started with!

Debt free in 14 years … what a great solution!

May 2, 2009
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Is Now The Time To Lock In?

By Mortgaging Costs, Time SensitiveNo Comments

With fixed interest rates at historical lows anyone with a variable rate is having to consider two big questions. Should I lock in to a fixed rate? If that answer is yes , then another question arises. When should I lock in ?

The first question is the most difficult. With variable rate mortgages at incredibly low rates, often less than 2% (April 17, 2009), it requires a virtual doubling of interest costs to secure a locked in rate. Past studies have shown that over the past 40+ years the lowest cost, over 90% of the time, would have been a variable rate. So a borrower is trying to find that elusive 10% of the time when a fixed rate works out best.

Is that now? A lot of borrowers lock in to a 5 year fixed term when they decide to lock in. Current best 5 year rates are at 3.9%. Most variable rate borrowers are currently paying 1.9% or less. This means that they will be increasing their borrowing cost by 2% if they choose to lock in. We are at a time when the Bank of Canada is still signaling that rates will stay low and the economy is looking like it may take a long time to recover.

So on a mortgage of $100,000. if a person moves from a 1.9% variable rate to a 3.9% fixed rate they will increase their cost by $166. P/M or $2,000 per year. If a person waits for rates to change before locking in a 1/4% increase on the same $100,000. costs only $250. per year. When you look at it this way the choice is much more difficult. Another factor in determining if it is time to lock in is the time remaining on your current term. If your variable rate term will mature within the next 12 months you are already facing a severe increase in borrowing costs at maturity. This is because variable rates were available under prime rate in previous years and now the pricing is at prime plus .8%.

So what is the answer to the above questions? There is no absolute right answer and as you can see above the factors can be complicated. That is why we recommend you start using a mortgage professional to help with these very important and very difficult decisions. Your mortgage professional is trained to sort through the above information as it applies to your situation and give you valuable advice on the pros and cons of each choice.

April 17, 2009
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Legal Costs

By Home Purchase, Home Renovating, Mortgaging Costs, RefinancingNo Comments

You will almost always require the services of a Lawyer or Notary Public to ensure that you obtain good title to your home free from unexpected charges or encumbrances. Your legal bill will include the cost of transferring the property into your name, as well as the cost of mortgage preparation and registration. In addition to the Lawyer’s or Notary’s fee for service, your bill will include the disbursements made on your behalf to land title office and other regulatory authorities.

In BC, Plan on legal fees of about $1,000 for a standard residential purchase and mortgage transaction, assuming there is nothing out of the ordinary (unforseen issues with title or additional investigations by the Lawyer or Notary). For a mortgage refinance, you don’t usually have to transfer ownership of the property, so legal fees may be somewhat less. Plan on about $850.00 for mortgage work, but if your lawyer has to pay off bills (credit cards, loans, etc) the cost can grow.

Check with your mortgage broker or legal professional to verify your fees before proceeding.

April 7, 2009
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The Appraisal

By Home Purchase, Home Renovating, Mortgaging Costs, RefinancingNo Comments

Often one of the lesser costs of acquiring and financing a home is the residential appraisal. An appraisal is often required for conventional mortgages where your borrowed amount represents a significant percentage of the property value. It may occasionally be required for a CMHC or Genworth insured mortgage as well. According to the BC Association of the Appraisal Institute of Canada, “an appraiser provides you with an impartial estimate of opinion of value of real estate. The appraisal is usually a written document setting forth an opinion of value for an adequately researched property as of a specific date and supported by the presentation and analysis of relevant data”.

An accredited appraiser provides support, advice and valuations on real property….and is a trained professional who observes, researches and analyzes the real estate market, taking into account the myriad of contributing factors that affect value. Appraisers are interested in facts, and will thoroughly investigate the property being researched. In order to do the job to the best of their ability, they keep abreast of current market trends, the general value of real estate in the area, taxes and special assessments.

The primary benefit of an appraisal to all parties to a purchase and mortgage transaction is the assurance of a fair market value arrived at using a scientific and artful process by a qualified professional. The cost of an appraisal starts at $250.00 (April 2009) and goes up from there depending on the complexity of the property.

April 3, 2009
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Survey Certificate or Title Insurance Costs

By Home Purchase, Home Renovating, Mortgaging Costs, RefinancingNo Comments

Here’s another closing cost that you might have to prepare for when purchasing your next home. Today lenders want the assurance that the home you are buying is compliant with local bylaws, and there are three ways of accomplishing this.

  1. If the existing homeowner is still in possession of a Survey Certificate, chances are you will not have to pay extra to prove compliance.
  2. If vendor of the property does not have the certificate you will have to produce a Survey of the property done by a BC Land Surveyor. The costs of Survey start at about $350 and increase depending on the property.
  3. Alternatively, you can instruct your lawyer or notary to purchase title insurance at a cost of about $200.00. With other protections against title fraud and errors and omissions on title, this option is proving to be the more popular and prudent solution.
March 26, 2009
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Refinancing vs Penalties

By Refinancing, Time SensitiveNo Comments

Interest rates are at historical lows (March 20, 2009). The Chartered Lenders’ prime variable rate is 2.50% and most offer a variable rate mortgage at prime plus .80% p.a. Their fixed mortgage rates are also extremely low, with many lenders now offering 4.15% fixed for five years and 5.25% fixed for 10 years! If you have a mortgage, I urge you to review your situation now. In many cases, an early renewal will result in significant net savings to you.

Lenders have a legal and contractual right to charge you an interest penalty if you choose to break your mortgage contract, so you need to find out what your penalty would be. Most lenders charge you the greater of three months’ interest OR what they call IRD or Interest Rate Differential. You can determine your penalty by obtaining (without charge from your lender) what is usually called a ” mortgage discharge inquiry”. I can help you with this, should you prefer.

There are loads of lenders looking for your business. Their interest rates are fantastic. Your net gain in five or more years, net of any payout penalty, may astound you.

Talk to your mortgage broker. Talk to me.

March 24, 2009
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Five Steps To Make Your Dream Reality

By Home PurchaseNo Comments

When my wife and I first got married, we had decided to rent. We had dreams of purchasing a home, but didn’t think we could afford the payments or the maintenance. We knew what we wanted, but houses were selling quickly and we hadn’t done the math. So for the next seven months, purchasing became just that…a dream.

It wasn’t until a while later when we decided once and for all…we were going to do it! We were going to make this dream a reality! But what was the process? Purchasing a home can be summed up in five easy steps:

1. The Pre-Approval
2. Finding that Special Place to Call Home.
3. The Approval
4. Final Legalities
5. Possession

THE PRE-APPROVAL:
Get a Pre-APPROVED not Pre-Qualified for a mortgage: A Pre-Qualification is a generic estimate of what you might be approved for and because of this can lend itself to troubles or frustration down the road.

A Pre-Approval requires you to verify your income, down payment, and credit situation by producing a number of documents (example: Employment Letter, Pay Stub, 2 Years of Tax Returns, and Three Months Bank or RRSP Statements). This will give you an accurate review of what you will be approved for. Once you have gone through this process you will be presented with a Pre-Approval Certificate showing the Interest Rate and the maximum mortgage you are Pre-Approved for.

FINDING THAT SPECIAL PLACE TO CALL HOME:
Present your Realtor with a copy of the Pre-Approval Certificate and go house hunting! Once you find that special place to call home, make an offer. Remember, because you were Pre-Approved and not
Pre-Qualified, you can be confident that you will be able to purchase this home.

THE APPROVAL:
Once the accepted offer has been signed, your Realtor will fax a copy for your Broker to submit to the Lender. As you gathered most of the required documents previously, there will be very little additional documentation required.

FINAL LEGALITIES:
With your financing in place, you will be asked to “Remove Subjects.” This means you commit 100% to purchasing this home. Two weeks prior to possession, you will receive a call from your Solicitor to sign the final documents.

POSSESSION:
You are now a Home Owner!

March 20, 2009
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BC Property Transfer Tax

By Home Purchase, Mortgaging CostsNo Comments

THE most significant cost of acquiring a home is almost always the Province of BC’s Property Transfer Tax. The tax is calculated at One Percent of the first $200,000 and Two Percent of the balance over $200,000. Every purchaser in BC has to pay this tax….UNLESS you are a first time home buyer.

Qualifying First Time Home Buyers are entitled to a “once-in-a-lifetime” exemption from the tax, up to a maximum house price limit. Those who have owned real property in the past, or those purchasing a home priced over a prescribed limit will have to pay. Want to know if you qualify? Check the Province’s Property Taxation Website and talk to a lawyer notary or Mortgage Professional to determine your personal qualification.

March 19, 2009
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First Time Purchasers

By Home PurchaseNo Comments

I bought my first home in 1971 and, like many first time home buyers, I knew very little about buying a home. In 1971, homes cost about 3 times a person’s annual gross salary. Financing was achieved via greements for Sale, CMHC direct lending, or from your Bank, Credit Union or Trust Company. Interest rates were fixed at 6%. Terms and amortizations usually coincided at 25 years.

The process of buying a home today is still confusing to most first timers….

  • When should we buy?
  • Where should we buy?
  • How much can we afford?
  • Should we go with a variable rate or a fixed rate?
  • What will our payments be?
  • Should we go short term or long term?
  • What will our costs be?
  • Are there any programs to assist first time home buyers?
  • Should we get a Pre-Approved Mortgage?
  • Should we get our financing directly from our Bank or through a Mortgage Broker?

To me, the most important thing for a first time home buyer is to partner with Professionals: a Realtor, a Lawyer, and a Mortgage Broker.

The Realtor will help you find the right home and help you prepare your Offer to Purchase Contract.
The Lawyer or Notary will review your Contract and warn you against legal pitfalls.
The Mortgage Broker (that’s me) will inform you of any programs for first time buyers, will ensure you get the very best mortgage financing available, and will work with you through the entire process to a satisfactory completion of your purchase.

I recommend first time buyers review our website at www.mortgagewest.ca for helpful information, including particulars of the several programs available to first timers from both Federal and Provincial governments. Since 1971, working as a banker and now as a mortgage broker, I have helped many people buy their first home. Despite the ups and downs of house prices and mortgage rates, I sincerely believe home ownership is an excellent goal for all Canadians. If you don’t yet own your own home, I urge you to contact a Mortgage Broker and begin the journey to home ownership. The Mortgage Broker will provide the answers to all your questions and work with you to a happy ending.

Why a Mortgage Broker instead of a banker? The banker works for the Bank, not for you, and can only offer that Bank’s mortgage products; and at prices dictated by their Head Office. Mortgage Brokers work for you and can locate the best mortgage for you, which might be from your own Bank or Credit Union or from a Trust or Mortgage Company. Like the banker, the Mortgage Broker does not charge for his services to you. Unlike the banker, the Mortgage Broker can and will offer you the lowest broker-discounted interest rates.

Go ahead, first timer. Buy now. Just make sure to surround yourself with the right professionals.

March 7, 2009
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Breaking Your Mortgage…Is It Worth It?

By Refinancing, Time SensitiveNo Comments

Interest rates are at historical lows. The Chartered Lenders’ prime variable rate is 2.50% and most offer a variable rate mortgage at prime plus .80% p.a. Their fixed mortgage rates are also extremely low, with many lenders now offering 4.15% fixed for five years and 5.25% fixed for 10 years (as at March 3, 2009)!

If you have a mortgage, I urge you to review your situation now. In many cases, an early renewal will result in significant net savings to you. Lenders have a legal and contractual right to charge you an interest penalty if you choose to break your mortgage contract, so you need to find out what your penalty would be. Most lenders charge you the greater of three months’ interest OR what they call IRD or Interest Rate Differential. You can determine your penalty by obtaining without charge from your lender what is usually called a ” mortgage discharge inquiry”. I can help you with this, should you prefer.

There are loads of lenders looking for your business. Their interest rates are fantastic. Your net gain in five or more years, net of any payout penalty, may astound you.

March 3, 2009
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Low Mortgage Rates = Opportunity

By Opportunities, RefinancingNo Comments

One of today’s biggest questions is “How can I take advantage of current low interest rates?”

The answer is that almost anyone can benefit from a review and restructure of their debt and I recommend that you consider working with a Mortgage Professional for proper advice and guidance. With super low interest rates currently available (February 2009), it is possible to use your home equity to make purchases such as home improvements, vehicles, recreation properties or investment properties. You may consider converting higher interest rate debt to low rate mortgage loans, or…use the funds available for a multitude of other purposes. Perhaps you would like to lower your monthly payments or just pay your mortgage off faster.

However, without the proper information and skill the average borrower can make costly errors in judgement. Today’s mortgages are complex and diverse, so the knowledge and experience acquired over my 40 years in the mortgage industry will help you make the right decisions AND save thousands of dollars.

February 3, 2009
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Mortgage Fraud? In My Town?

By TipsNo Comments

There’s been a lot of publicity in recent months about the incidence of mortgage fraud. Most of us think we will never get involved in such a thing. I’m writing from Kamloops BC and you can be sure that fraudulent activity is happening in the interior of BC. Here’s one specific scam that we all need to be aware of.

You are at work and a colleague approaches you. “Hey’” he says, “I know a risk free way to make a large sum of money real quick. And it’s legal too!”

“If you just talk to this guy….he wants to buy a house, but he can’t buy the house in his own name. So, if you are willing, he will purchase the home in your name, supply the down payment, and he will make the mortgage payments by depositing directly into your bank account. Not only do you end up owning a home with no payments, but he will pay you $5,000 up front.”

Some of you may already be thinking this offer is too good to be true….I hope so. Because after acquiring the home which may be used for some purpose that you do not want to be involved with, this mystery man stops making the payments. Your lender then starts to foreclose on this home. Typically, the lender finds that the home has been mistreated in some way, and the value is much less than your special friend (you!) paid for it. Guess who’s going to be responsible for the shortfall on sale of the property, the unpaid interest, penalties and legal costs….YOU!

If this scam–sometimes referred to as the “Straw Buyer Scam,” should come across your path, contact the RCMP commercial crime unit right away. Trust me…you don’t want to jump in on this one. Calgary has been a target market for this scheme in recent months, but coming soon to a town near you….

January 6, 2009
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